APL: Atlas Pipeline Partners Message Board

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Gold/Mining/Energy : APL: Atlas Pipeline Partners

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From: Jim P.	4/2/2012 1:04:16 AM
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Pioneer presentation indicates the major plant expansion by partnership with APL will be filled much earlier then APL has indicated. Last year APL indicated drilling in the Sprayberry field was increasing gas processed at about 40 million per year rate. APL then placed back in service a mothballed 60 million a day plant. During 4th q 2010 APL announced an additional plant requested by partner Pioneer that would have a capacity of 200 million per day. 1st phase of 100 million to be in service 1st Q of 2013. 2nd phase est 2015 or when needed. Current Pioneer presentation has the second phase in service in late 2013. Reason given is the horizontal wolf camp drilling in southern and central part of the field. phx.corporate-ir.net This is a significant increase in the most profitable gas stream APL processes. There is very little gathering cost as most gas is delivered to central gathering locations instead of from each well. Pioneer owns about 30 percent of the soon to be 3 plants in the partnership. Gas valued at about $12 per thousand cubic feet at the tailgate. Processor take is 16 to 18 POP with about 25 cents operating expenses per thousand cubic feet gathered. Math is straightforward, for every 100 million in capacity utilized it is (($12 times .16) less .25) times 100,000 times 365 days times .70 for APL ownership stake divided by shares outstanding of about 55 million currently. Roughly 79 cents per share before interest cost in gross margin. Parent split (ATLS) would likely be at 50 percent by then so value to APL holders would be about 80 percent of 79 to account for interest and distribution coverage of about 1.15 percent. This would be divided by 2 for parent split the multiplied by expected yield of security at 6.5 percent. Works out to about 30 cents per year increase in distributable cash flow per 100 million in plant addition in the Permian. Expected yield 6.5 percent or so for a likely price increase of about $4.5 per share for every 100 million in plant capacity utilized. The 200 million plant addition in the OK mississippi play is much less profitable and the 60 million a day plant addition a Velma is even less profitable on a comparable as it is fee based. These plants will actually add distributable cash flow at a fast rate account the distributions have to rise from current $2.20 per year to $2.80 per year before the IDR's get locked in at the 50 percent rate. Possible end of 2013 distribution rate of over $3 per year. The variable in this is product prices. Ethane prices down significantly but 1 half of ethane that is gathered is Conway hub priced and that will change to Mt Belvue in 2013. The major contributor to margins is by dollar value is propane, then heavier NGLs, ethane and condensate with natural gas in way last. Best case pricing is oil stays up, natural gas increases, ethane increases and estimate of $3 per year distribution rate will be reached early and exceeded significantly. Price at 6.5 percent yield and a $3 plus distribution would likely be above $46 in 2013 and if Citibank estimate of 5.5 percent yield occurs then low end stock price likely in the mid 50's. Current price $35 per share with low risk capital gains possible of low end 30 percent over the next year and a half. Possible gains would be double this estimate not including cash distributions.

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